- [Narrator] This is a production of WEDU PBS, Tampa, St. Petersburg, Sarasota.

- In the beginning, before Florida became a tourism mecca and before the Sunbelt migration brought millions of newcomers, the leading industry in the state was agriculture.

And for good reason.

Florida's growing season is longer than any other state and it gets more rain than most of the country.

During winter months, more than half the fresh vegetables consumed in the US come from Florida.

Despite its rich legacy, Florida's agricultural industry is facing major challenges.

You're about to meet the CEO of one of Florida's largest and oldest agricultural companies.

Next, on the "Suncoast Business Forum."

- [Endorser] "Suncoast Business Forum" brought to you by the financial services firm of Raymond James, offering personalized wealth management advice and banking and capital markets expertise.

All with the commitment to putting clients' financial well-being first.

More information is available at raymondjames.com.

(theme music playing) - More than a hundred years ago, Dr. Howell Lykes and his seven sons established an agricultural company called Lykes Brothers.

Back then, Tampa based population was only around 15,000 people, not the 3 million plus it is today.

What started over a hundred years ago as the Lykes family's 500 acre farm and cattle ranch has now grown to more than 600,000 acres in Florida and Texas.

And for well over a century, Lykes Brothers has played a prominent role in Florida's evolving agricultural landscape.

Johnnie James is president and CEO of Lykes Brothers.

Johnnie, welcome to the "Suncoast Business Forum."

- Thanks, Jeff, I'm happy to be here.

- It's great to have you.

Now in the 1850s, Frederick Lykes and his family acquired a small farm up near Brooksville.

In 1874, his son, Dr. Howell Lykes gave up medicine, he began in logging, and he got involved with cattle ranching, and that was the beginning of what has grown into a multi-generational family business that spans the world.

Tell us a bit of an overview of the Lykes family legacy.

- Well, first of all, lemme start with the word family, because I think that is part of the Lykes legacy, right?

I mean, Dr. Lykes and his wife had eight children, the oldest was a daughter and seven sons.

And as he got them involved in the little cattle operation, the message he kept saying was, "Stick together no matter what, and look after your sister."

And they did that.

And I would tell you that their children did that and they still do that today.

So the first part of legacy is just the tightness of the family, of honoring what the patriarchic started, right?

So I think think the other part of the legacy is they were entrepreneurs, right?

They started, as you said, with logging and cattle.

And because of cattle demand, they needed a ship to move the cattle, so they got into shipping and they ended up being the largest steamship company in the world with Lykes steamship.

And so that's part of their legacy.

They got into banking because they were doing financial transactions and ended up having one of the largest banks First Florida bank here in Florida.

They needed insurance, so they ended up starting an insurance company, Lykes Insurance, over 85 years old, right?

So they got into citrus, and became one of the largest citrus growers with over 32,000 acres.

And they vertically integrated, decided to get into a packaging processing with a Pasco Packing Company up in Dade City.

And then, they did the same thing with meat, they got into meat packing and processing, so that's all part of the Lykes legacy that if you ask anybody who is Lykes, all of that's a part of the story.

- In the United States when it comes to family businesses, less than half of family businesses in this country make it to the second generation.

The number of family businesses that make it to the fourth or fifth generation, less than 3%.

But the Lykes family is now in its 5th and 6th generation, so is entrepreneurship part of the Lykes family DNA?

- I would say definitely, it has been...

If you look back over time, the family has been heavily involved.

The first first gen was Dr. Lykes, the brothers were the second gen, they were 100% engaged.

And then of the third generation, 75% of the men of that generation, whether they were sons or son-in-laws, worked in the business, so they were owner operators so to speak.

But by the time we got to the fourth generation, only about a third of the men in the family actually worked in the business.

And today, in as far as the fifth generation, we don't have any of those in the business.

But many of them are out on their own having successful businesses, some are CEOs, some are have their own businesses, some are in wealth management, some work for investment banking companies.

So they're all entrepreneurial spirits, they're just not applying those in the company today.

- Now, you come with a unique background that's really well suits you for being CEO of Lykes Brothers because one, you were a board member before you were the CEO, and two, you worked with a number of families in the agricultural industry in the state of Florida.

Again, before you came to Lykes Brothers.

- No, that's right, Jeff.

I think my background having served large agricultural family owned businesses served me well, and Lykes used to be a client of mine.

So I actually worked as an outside audit from tax firm on their work for 10 or 15 years, so I knew a lot about their operations, I knew a number of the family members through that process.

And that's actually how once I retired from public accounting and they invited me to come onto the board a year or two before I was asked to be the CEO.

- You are a sixth generation Floridian.

You grew up in Auburndale in the 1960s, 1970s.

That was the heyday of agriculture of citrus.

Things have changed a bit.

Did you anticipate that you'd end up in agriculture?

- Absolutely not.

My father, I think was a very wise man.

I didn't appreciate it at the time, but he had subbed me out to work out in some groves where I had to do the manual labor part, and that wasn't a lot of fun, he had me work the night shift at the trucking company there in town.

So he pretty much instilled in me a desire to go to college and get a good education.

So I would say the answer to the question is no, and it inspired me to be more productive in college.

And the reason I'm a CPA is my uncle was a CPA, and so I saw his success, and I was intrigued by all the different types of things that he got to work on with different people.

And so that inspired me to do that.

- After high school, you went to the University of Florida, you got your bachelor's in accounting, you got a master's in accounting, and then you worked for an accounting from Arthur Andersen.

Tell us about your first job in accounting.

- Well, that was an exciting time.

That was back in the early '80s, and the oil boom was kicked in.

And of course Houston was one of the hottest cities to work in, so I was excited to go work for Arthur Andersen in Houston, Texas.

They were at the time where the preeminent accounting firm, that office was about 1500 people, so it really wasn't a fascinating experience.

And I worked, I always tell people that I was there a little over two years and I got four and a half years of experience.

So that's how much we worked.

But I ended up feeling like I'm starting to get entrenched and if I didn't make a change, I missed Florida.

And so I wanted to get back here.

And so after a couple great years out there, I decided to look for opportunities back here in Florida.

- So you came back to Florida, you changed firms, you went to work for KPMG.

- I did.

- [Geoffrey] And you moved to Central Florida.

What attracted you to Central Florida?

- Well, it was home, right?

I wanted something close to to to Polk County, to Auburndale, but I didn't want to go to Auburndale, I wanted something close.

And so I looked at Tampa and Orlando, and I had an opportunity to transfer with Arthur Andersen to either place.

But as I looked at the cities, Orlando was a little bit ahead of Tampa at the time in terms of just newness and investment.

Disney World had come there and they were... And then SeaWorld had just gotten there, so there was a lot of dynamics that were happening there.

So that was appealing to me.

And I think the other thing that really appealed to me, Jeff, was KPMG was not there until they bought a local firm called WO Daley, and WO Daley was the preeminent agricultural accounting firm in the southeast.

And so I saw it as an opportunity to join them, get on the ground floor, and work with the type of clients that I was familiar with from growing up.

- So after working with KPMG for a number of years, you got the entrepreneurial spirit, and you started your own accounting firm, in fact, several accounting firms.

- That's correct.

I think that like the original Lykes brothers, and the pursuing family generations, I have a little bit of an entrepreneurial spirit myself, and I felt like I like the idea of growing the business the way I wanted to grow it, right?

And so myself and two other partners started Tedder James Worden and Associates, never dreamed in 10 years we'd grow it to 120 people and be the largest firm in central Florida, bigger than the big four.

And we did that really by focusing on heavily on ag.

I mean, ag was a big backbone of what we focused on.

- How do you reflect on that period, and some of the needs and the challenges that were faced by ag businesses then?

- Yeah, it was the beginning of the change.

I mean, through the '70s and '80s citrus reigned, and it was highly profitable if you just...

Anybody that got in it made money.

But then starting in the '80s, the freezes came, and everybody that's looked at the history of citrus in Florida knows that in '84 and '85 and '89, we had some devastating freezes and wiped out a lot of people.

And a lot of the industry moved south because they realized, the central and northern central part of Florida just was no longer conducive for citrus, and so it moved south.

And it started the migration of change.

And then shortly thereafter, something called canker came about a disease, the first disease that started to impact the industry.

So, I watched all that happen as I watched the industry reach its peak and then started to decline for various external factors.

- After 10 years with your own firm, you actually merged with another national firm, McGladrey and then you continued growing that business for several more years.

And after several more years of success, you headed for the hills.

By the hills, I mean the hills of North Carolina.

- I realized that I've kind of accomplished all I wanted to accomplish in that part of my career.

So I exited, I went to North Carolina, and to be honest, I thank some of my ag clients wore off on me.

I had this desire to own a piece of land and to grow something as I watched them do, right?

And I feel like, maybe I'd learned a few things and I could do it myself.

So that's what that venture was about was I bought 40 acres and decided to grow some berries and some wine grapes and see what I could do.

- [Geoffrey] How'd that work out?

- Well, what's the old story, how do you make a million in agriculture, you start with two."

Actually, as far as development of the farm and being able to produce the product, it went as planned.

The challenge, just like this, the challenge today was getting the labor to pick it.

I could not get the labor to up in the mountains 'cause we weren't on the pathway of the workers' migration as they start in Florida, and worked their way up the east coast, there weren't any other farms.

I was the largest firm in the tri-county area.

So we really weren't able to attract the labor and that was the part I missed.

And so I ended up selling it a couple years ago.

- After the farm, you became the CEO of a very large national transportation company.

What was involved with that?

- Well that was the owner and CEO had some health issues, and he reached out to me and he'd been a client of mine before, and said, "Hey, the company is struggling, and I'm having some issues, which I need you to come in and help me turn the company around and run this thing."

So I said, "I can give you part of my time."

'Cause I still had the farm at that moment in time, and so I started off with kind of 50% of my time, of course within short order, it was 100% of my time.

And but we were successful, and I would tell you that after a year we got it out of the ditch, we refinanced some of the debt, we got rid of old equipment and got more efficient equipment and we were able to after the end of three years, we were profitable again.

The company's a success today.

- After you left, the trucking industry, you became a consultant, you did strategic business consulting, you also did wealth planning strategies, and you continued working with ag families, right?

- That's correct.

That's always been something that I've always admired.

I felt like from a value system I aligned with them, a lot of them have a strong faith.

I mean, you're at the mercy of so many things from the external factors that you can't control, right?

And they were always just down to earth, goodhearted people that worked hard and I admired that.

- And then in 2018, you joined the board of Lykes Brothers, you'd been working with them for quite a few years.

How did all of those years working with Lykes, working with the other ag families inform you in your ability to be an effective board member?

And what was going on in the Lykes' family business, Lykes Brothers around 2018?

- The individual that had been in that seat was a financial guy, was a CPA, and he announced he was an independent director and announced he was retiring, so they needed somebody with the financial skills and background, CPA.

They knew me, right?

And so that's why I think they turned to me.

And then I was able to quickly, I knew the business, I knew the issues in the industry, and so I was quickly able to come in and get my arms around things and offer advice.

That's what a board member does, is you challenge management to make sure they've thought of all the right things and to come up with solutions to help to add to the bottom line.

And at the time, greening had was already well underway and they were trying to deal with "How do we deal with this?"

And the pace of the scale back, cattle prices were low at the time, and so there were a lot of challenges at the time for the business.

And so I welcomed the opportunity to come on the board and to assist management with some of the things that they were dealing with.

- A year after joining the board at Lykes Brothers, you became the CEO.

It was an interesting transition.

It wasn't something you were looking for.

- No, no.

- How did this happen?

- No, actually I was on the search committee looking for the successor for Charlie Lykes.

And Charlie had been at the company for 47 years, right?

And he had started all the way down at the ranch and working cattle and worked us all the way up, and he was someone I had great respect for and he knew the business well.

And so they asked me to be on the search committee along with a couple family members and I was happy to do it.

And we hired a national search firm, we interviewed finalists, and at the end of the day, we all agreed we didn't find the person that had that match of both knowledge of the industry and the business but also culture fit.

And, so I was driving on the way home back to Orlando and I got a call from the chairman of the board who said, "Hey, we've talked, and we think we've decided on a candidate."

And I said, "Well, fantastic.

Who is it?"

He says, "You."

So I have to say I did not see that coming.

And then my wife and I sat down 'cause that's a big change.

I wasn't looking to do something like that.

But I also saw it as a tremendous honor, and a tremendous opportunity.

I have a great admiration for the family and the legacy of all they've accomplished.

So it was one of those things where you almost say "We've gotta do this."

- Lykes Brothers is one of the largest agricultural families and largest agricultural businesses in Florida.

What is the scope of the agricultural business today?

- There's a lot of misperception about what Lykes is today compared to what it was.

At one point we were over 4,000 employees, right?

And all these different dynamic businesses that we mentioned earlier, and today we're less than a hundred employees.

Most people are surprised by that.

But we're still the 14th largest landowner.

And so we have a lot of businesses that we operate, but we're able to do it with fewer hands.

And so we do a lot of leasing of land, we do hunting leases, we do cattle leases, we do sugar cane leases, we have the cattle, we have citrus.

Well, a big one today that you'll smile at when I tell you is gopher recipients sites.

So with all the development in Florida, gopher is protected animal, and so if a developer is gonna move any dirt, they gotta first move the gopher tortoise.

And so some of our land that we have that has conservation easement on it, it's very suitable for the gopher habitat.

So we take that land, it can't be developed anyway, right?

'Cause it's on a conservation easement, and we get it permeative as a gopher recipient site.

- There are about 10 million acres of agricultural land in the state of Florida, which is about one quarter of the total area of the state of Florida.

The average farm family in Florida is about 200 acres of land.

Surprisingly, nine outta 10 family farms make less than $100,000 a year.

How is it possible for Florida to remain sustainable if families have small acreage and aren't making perhaps enough money to survive?

- Yeah, I think that's a trend that's across the country, right?

Scaled is important now, unfortunately, because regulations have imposed demands on farms to require reporting on fertilizer applications and report that to the state.

You gotta report on water usage.

And so all of that mandates almost a position just to handle the reporting, right?

And so it's very hard for smaller farms to be able to meet the compliance requirements and still farm.

- Is there enough interest on the state level to at least attempt to make the small family farm in Florida viable?

- Absolutely.

In fact, I'm more excited about the possibility of us addressing that than I have been in some time, and that's really come about with our new ag commissioner.

And we have an ag commissioner now that's actually an ag guy, all right?

He grew up, he's an ag farmer, he gets it.

And one of the things that he said right after he won the election was he views food and the production of food are farms as a national security interest.

That was music to my ears, right?

The fact that here's somebody, the leader here at the state level is actually recognizing that our farms are precious and we're losing them, and we've gotta do something to ensure future food production stays here.

- 20 Years ago, citrus production in Florida was 300 million boxes of citrus a year, grapefruits and oranges.

This year it's expected to be less than 20 million boxes.

That's a decline of more than 90%.

Now, Lykes Brothers grow citrus, processes citrus.

What goes into your thinking when you're addressing citrus as part of your business?

- Well, clearly, we know it's on its last leg.

I mean, I told you earlier, we had close to 32,000 acres of producing citrus and now we have less than 3000, right?

So just like the industry as a whole, we're mirroring that, right?

We got 10% of what we had before and it's still continuing to shrink.

We haven't been able to find a cure for this green disease.

And so we've been trying to manage what we have profitably on the wind down, not putting more money in it than we have to, but putting enough to where we can get one more crop and have a cash return on that, right?

We no longer process 'cause we sold the plant, but we are a member of a cooperative called Florida's Natural.

So in a sense we're a co-owner of that, right?

And so we pull all of our fruit through that.

But it's a challenge, a challenge not only for us as growers, but it's a challenge for a processor because there's not enough volume of fruit to get the efficiency of covering your fixed cost.

You've got enough volume.

So the whole industry is really struggling for a solution.

- As surcharge has declined, other crops and other plants have actually grown in their percentage of acreage here in the state of Florida.

Things like Florida culture, which are ornamental plants and so forth.

How has agriculture diversified given the decline in citrus?

- Well, that's something all of us that are citrus growers have been trying to figure out, what do we do with all this fallow citrus land?

You know, some are more fortunate than others, some are in the pathway of development, so they have already option of how to monetize.

But most of our land is not in that pathway of development.

So we've been exploring alternative crops we've looked at trialing stevia, we've looked at hemp when the hemp bill came out in 2018, we're looking at bamboo right now, both as a wood source and also as a food source.

And so all of the, I think ag community, is trying to figure out what do we do with all of this land that really is suited for ag, but you're not gonna put any more capital into citrus until there's a solution.

What else can we grow?

- Cattle has always been an important part of Lykes Brothers business.

And how important is livestock, cattle, hogs, other animals in the total agricultural mix of the state of Florida?

- Yeah, it's not a top, but it's a top three, right?

And so cattle has always been a core part of what Lykes Brothers is about.

We have right about 15,000 heads, so that makes us the top five cow/calf producer here in the United States so it's very material for us.

It does a number of things and it allows us to keep our ranch from growing over 'cause of the cattle feed and help keep the overgrowth down.

It also keeps an ag exemption on everything.

And food prices and beef prices have actually risen since COVID.

It's actually prices have been the best they've been in a number of years.

So we're encouraged about where the beef is headed.

- The total value of agricultural products sold from the state of Florida is about $7.5 billion a year, but that's really just the small part of the total ag picture.

There's a lot more, there's food processing, there's distribution, there's labor.

Ag is a lot bigger than most people realize, right?

- Right, ag for forever, they used to say it was the number one industry in the state and then tourism ultimately caught it because of all... And that's all tourism, not just Disney World.

But it's still number two.

So it's still a material industry.

I'd say real estate's probably up there knocking on the door as well with the inbound traffic of people moving to Florida, but I'd say still a top three, right?

- Now, weather, inflation, market prices, all things you cannot control.

How have they impacted your business?

- All you have to do is look to last year, and it's a fresh reminder of how much things are outside our control, right?

Hurricane Ian impacted us tremendously.

While we didn't have trees uprooted like some of our friends did who were right in the pathway, but we had a lot of fruit blown on the ground.

And we lost 60% of our crop last year, from the winds blowing the crop off or if didn't blow it off right during the storm, it shook the trees so much that it ultimately dropped the fruit, so a big impact on that.

And if you go back further in 2022, if you go back to January, I dunno if you recall, we had a really cold spell there at the end of January.

We had a hard freeze, and we had some temperatures in the low to mid 20s for about eight or 10 hours, that impacted us.

And not only did it freeze the fruit and we lost a lot of fruit from the prior year.

So now that's two years in a row of fruit that we lost.

But we also had wood damage, I mean, it froze so much that some of the wood cracked and split.

So yes, outside factors like mother nature, whether it's a freeze event, or whether it's a wind, impacts us.

- Florida is fortunate, more fortunate than a lot of states.

We have plentiful rainfall, we have abundant freshwater, most of the time if there's not a drought, water, freshwater, very important for agriculture to succeed, also very important for urban growth, which is continued on and on and expected to continue.

How does Lykes Brothers and how does the ag community deal with maintaining freshwater supply and controlling pollution?

- Well, Lykes was very proud of our contributions in the water area.

I mean, first of all, all agriculture is subject to something called BMP's, best management practices, that are administered by the Ag Department here in Florida.

So we have to have retention ponds, and we have to retain all water that comes off our groves or any of our farming operations.

We have to catch that and not let it leave.

And you gotta remember, when you're a large landowner like us, we're our own neighbor, right?

So anything that that we do, we're doing to ourselves.

The other thing that we're really proud about is we've done some water projects, we've done some private public ventures with the state and the South Florida Water Management District where we'll take say 8,000 acres and we'll put a six-foot berm all the way around it.

And we'll pump water that's flowing south from Orlando that has all those fertilizer, nitrogen, and phosphorus will pump that water into this 8,000 acres and sheet it across, right?

And let all the plant life absorb the phosphorus and nitrogen, and then we pump the water back in the canal on the low end.

And we have it tested by a third party and it's clean, we clean it up.

So part of what we do is we've got about 28,000 acres dedicated to doing this water purifying.

The second benefit of those dams, if you will, water projects is we can also store water, so in the event of a major hurricane that is dumping a ton of water and doesn't go move very fast that's when Lake Okeechobee is forced to open up the water, and it sends the water east and west before they want to.

And that then is what starts that blue-green algae.

So we're able to give them more of a runway so we can stack some of that water from getting to the lake, forcing them to open.

So we play a big role, and that's one of the things, I think we've gotta do a much better job is to educate the general public of that ag actually is a positive contributor to the environment as well as to the water quality.

- You've been around Florida's agricultural community, your whole life, your whole career.

One of the terms we hear very often when describing the Florida Ag community and family farms is resilient.

That these are folks who through thick and thin, through good weather, bad weather, all different circumstances, continue going forward.

Tell us your impression of the qualities of family farm businesses in Florida that keep them going through good times and bad.

- Well, I think there's a couple factors that do lead to that resiliency.

Number one is, like I talked about earlier, about the ports of family because my grandfather started this, and then my father, and now I, there's a sense of pride and a connection to the land and so you're gonna do whatever it takes, right?

So that's part of that resiliency.

It's a heritage.

The other part of it is, it's a community.

I think this, unlike any other industry, in the ag community, we're not competing, right?

We're all trying to solve the same problem.

And if any one of us figures it out, we're gonna share it with the others, right?

Because we care about the community and that's what happens.

You see it so many times, whether it's trying to figure out a harvesting, to mechanical harvesting, we share our best practice ideas.

If we've got something that's working on this screening or we thank, we share it, right?

So the resiliency comes from the heritage of the family and also I think the community of being together.

- Well, Johnnie, I'd like to thank you so much for being our guest today.

- It's been my pleasure.

- If you'd like to see this program again or any of the CEO profiles in our "Suncoast Business Forum" archive, you can find them on the web at wedu.org/sbf.

Thanks for joining us for the "Suncoast Business Forum."

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